Exhibit 99.2
WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
Three Months Ended | Years Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenue | $ | 207,472 | $ | 192,129 | $ | 705,046 | $ | 636,399 | ||||||||
Cost of operations | 72,895 | 69,475 | 266,654 | 247,311 | ||||||||||||
Sales and marketing | 41,328 | 40,129 | 145,962 | 138,025 | ||||||||||||
General and administrative | 23,397 | 24,183 | 91,141 | 91,580 | ||||||||||||
Depreciation and amortization | 7,721 | 7,418 | 30,792 | 30,521 | ||||||||||||
Interest income | 938 | 15 | 2,545 | 51 | ||||||||||||
Interest expense | 7,066 | 5,099 | 24,496 | 23,123 | ||||||||||||
Loss on convertible notes | — | — | — | 2,058 | ||||||||||||
Gain on investments | — | — | — | 139 | ||||||||||||
Other expense | — | — | 1,712 | 4,100 | ||||||||||||
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Income before income tax provision | 56,003 | 45,840 | 146,834 | 99,871 | ||||||||||||
Income tax provision | 19,815 | 18,379 | 55,530 | 35,847 | ||||||||||||
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Net income | $ | 36,188 | $ | 27,461 | $ | 91,304 | $ | 64,024 | ||||||||
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Net income per common share: | ||||||||||||||||
Basic | $ | 0.95 | $ | 0.75 | $ | 2.41 | $ | 1.75 | ||||||||
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Diluted | $ | 0.73 | $ | 0.60 | $ | 1.97 | $ | 1.48 | ||||||||
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Weighted-average shares outstanding used in computing income per common share: |
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Basic | 38,006 | 36,583 | 37,854 | 36,600 | ||||||||||||
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Diluted | 55,211 | 51,338 | 54,179 | 52,653 | ||||||||||||
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WEBMD HEALTH CORP.
CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands, unaudited)
Three Months Ended | Years Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenue | ||||||||||||||||
Advertising and sponsorship | ||||||||||||||||
Biopharma and medical device | $ | 132,166 | $ | 119,528 | $ | 428,519 | $ | 371,220 | ||||||||
OTC, CPG and other | 38,847 | 38,758 | 132,754 | 127,805 | ||||||||||||
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171,013 | 158,286 | 561,273 | 499,025 | |||||||||||||
Health services | 28,803 | 27,218 | 113,937 | 110,441 | ||||||||||||
Information services | 7,656 | 6,625 | 29,836 | 26,933 | ||||||||||||
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$ | 207,472 | $ | 192,129 | $ | 705,046 | $ | 636,399 | |||||||||
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Net income | $ | 36,188 | $ | 27,461 | $ | 91,304 | $ | 64,024 | ||||||||
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Interest, taxes,non-cash and other items (a) | ||||||||||||||||
Interest income | (938 | ) | (15 | ) | (2,545 | ) | (51 | ) | ||||||||
Interest expense | 7,066 | 5,099 | 24,496 | 23,123 | ||||||||||||
Income tax provision | 19,815 | 18,379 | 55,530 | 35,847 | ||||||||||||
Depreciation and amortization | 7,721 | 7,418 | 30,792 | 30,521 | ||||||||||||
Non-cash stock-based compensation | 8,291 | 9,012 | 29,329 | 33,743 | ||||||||||||
Loss on convertible notes | — | — | — | 2,058 | ||||||||||||
Gain on investments | — | — | — | (139 | ) | |||||||||||
Other expense | — | — | 1,712 | 4,100 | ||||||||||||
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Earnings before interest, taxes,non-cash and other items | $ | 78,143 | $ | 67,354 | $ | 230,618 | $ | 193,226 | ||||||||
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(a) | Reconciliation of net income to Adjusted EBITDA. |
(b) | See AnnexA-Explanation ofNon-GAAP Financial Measures. |
WEBMD HEALTH CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, | ||||||||
2016 | 2015 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Cash and cash equivalents | $ | 492,424 | $ | 641,165 | ||||
Accounts receivable, net | 179,454 | 174,313 | ||||||
Investments | 498,500 | — | ||||||
Prepaid expenses and other current assets | 15,294 | 18,998 | ||||||
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Total current assets | 1,185,672 | 834,476 | ||||||
Property and equipment, net | 83,296 | 81,027 | ||||||
Goodwill | 202,980 | 202,980 | ||||||
Intangible assets, net | 7,774 | 10,894 | ||||||
Deferred tax assets, net | 14,544 | 15,694 | ||||||
Other assets | 6,920 | 10,852 | ||||||
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Total Assets | $ | 1,501,186 | $ | 1,155,923 | ||||
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Liabilities and Stockholders’ Equity | ||||||||
Accrued expenses | $ | 78,597 | $ | 80,664 | ||||
Deferred revenue | 105,310 | 102,715 | ||||||
2.25% convertible notes due 2016, net | — | 102,523 | ||||||
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Total current liabilities | 183,907 | 285,902 | ||||||
2.50% convertible notes due 2018, net | 398,066 | 396,281 | ||||||
1.50% convertible notes due 2020, net | 295,432 | 294,266 | ||||||
2.625% convertible notes due 2023, net | 351,190 | — | ||||||
Other long-term liabilities | 28,731 | 23,246 | ||||||
Stockholders’ equity | 243,860 | 156,228 | ||||||
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Total Liabilities and Stockholders’ Equity | $ | 1,501,186 | $ | 1,155,923 | ||||
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WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Years Ended | ||||||||
December 31, | ||||||||
2016 | 2015 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 91,304 | $ | 64,024 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 30,792 | 30,521 | ||||||
Non-cash interest, net | 3,906 | 4,172 | ||||||
Non-cash stock-based compensation | 29,329 | 33,743 | ||||||
Deferred income taxes | 1,083 | (7,713 | ) | |||||
Loss on convertible notes | — | 2,058 | ||||||
Gain on investments | — | (139 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (5,141 | ) | (37,507 | ) | ||||
Prepaid expenses and other, net | 4,039 | (4,132 | ) | |||||
Accrued expenses and other long-term liabilities | 3,246 | 9,606 | ||||||
Deferred revenue | 2,595 | 12,930 | ||||||
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Net cash provided by operating activities | 161,153 | 107,563 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (29,785 | ) | (48,372 | ) | ||||
Purchases of investments | (1,446,410 | ) | — | |||||
Maturity of investments | 948,078 | 139 | ||||||
Partial redemption of cost-method investment | 2,599 | — | ||||||
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Net cash used in investing activities | (525,518 | ) | (48,233 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from exercise of stock options | 65,309 | 21,939 | ||||||
Cash used for withholding taxes due on stock-based awards | (17,599 | ) | (6,438 | ) | ||||
Net proceeds from issuance of convertible notes | 350,394 | — | ||||||
Maturity of convertible notes | (102,682 | ) | (151,038 | ) | ||||
Repurchase of shares through tender offers | (110,413 | ) | — | |||||
Purchases of treasury stock | (23,643 | ) | (28,406 | ) | ||||
Excess tax benefit on stock-based awards | 54,258 | 39,002 | ||||||
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Net cash provided by (used in) financing activities | 215,624 | (124,941 | ) | |||||
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Net decrease in cash and cash equivalents | (148,741 | ) | (65,611 | ) | ||||
Cash and cash equivalents at beginning of period | 641,165 | 706,776 | ||||||
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Cash and cash equivalents at end of period | $ | 492,424 | $ | 641,165 | ||||
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WEBMD HEALTH CORP.
NET INCOME PER COMMON SHARE
(In thousands, except per share data, unaudited)
Three Months Ended | Years Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Numerator: | ||||||||||||||||
Net income – Basic | $ | 36,188 | $ | 27,461 | $ | 91,304 | $ | 64,024 | ||||||||
Interest expense on 1.50% convertible notes, net of tax | 878 | 864 | 3,513 | 3,456 | ||||||||||||
Interest expense on 2.50% convertible notes, net of tax | 1,827 | 1,797 | 7,307 | 7,189 | ||||||||||||
Interest expense on 2.25% convertible notes, net of tax | — | 449 | 457 | 3,460 | ||||||||||||
Interest expense on 2.625% convertible notes, net of tax | 1,676 | — | 3,911 | — | ||||||||||||
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Net income – Diluted | $ | 40,569 | $ | 30,571 | $ | 106,492 | $ | 78,129 | ||||||||
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Denominator: | ||||||||||||||||
Weighted-average shares – Basic | 38,006 | 36,583 | 37,854 | 36,600 | ||||||||||||
Stock options and restricted stock | 1,158 | 1,427 | 1,658 | 1,412 | ||||||||||||
1.50% convertible notes | 5,699 | 5,694 | 5,695 | 5,694 | ||||||||||||
2.50% convertible notes | 6,210 | 6,205 | 6,206 | 6,205 | ||||||||||||
2.25% convertible notes | — | 1,429 | 353 | 2,742 | ||||||||||||
2.625% convertible notes | 4,138 | — | 2,413 | — | ||||||||||||
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Adjusted weighted-average shares after assumed conversions – Diluted | 55,211 | 51,338 | 54,179 | 52,653 | ||||||||||||
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Net income per common share: | ||||||||||||||||
Basic | $ | 0.95 | $ | 0.75 | $ | 2.41 | $ | 1.75 | ||||||||
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Diluted | $ | 0.73 | $ | 0.60 | $ | 1.97 | $ | 1.48 | ||||||||
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